IN THE COURT OF APPEALS OF IOWA

No. 15-1960

Filed January 11, 2017

SCHULZ FARM ENTERPRISES, INC.,

Appellant,

vs.

IMT INSURANCE,

Appellee.

________________________________________________________________

Appeal from the Iowa District Court for Polk County, Arthur E. Gamble, 

Judge.

Schulz Farm Enterprises, Inc. appeals a grant of summary judgment to 

IMT Insurance. AFFIRMED.

Eldon McAffee and Julie Vyskocil of Brick Gentry, P.C., West Des Moines, 

for appellant.

Caroline K. Bettis and Scott Wormsley of Bradshaw, Fowler, Proctor & 

Fairgrave, P.C., Des Moines, for appellee.

Heard by Vaitheswaran, P.J., and Potterfield and Bower, JJ.
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BOWER, Judge.

Schulz Farm Enterprises, Inc. (Schulz) appeals the district court’s grant of 

summary judgment to IMT Insurance. We hold the district court properly found 

there were no genuine issues of material fact and IMT was entitled to judgment 

as a matter of law. We affirm the district court’s grant of summary judgment in 

favor of IMT. 

I. Background Facts and Proceedings

Schulz is a farming operation based in New Hampton, Iowa. Schulz 

contracted with Clark Swine Technology, Inc. (Clark) to custom feed hogs owned 

by Schulz at a site owned by Wilson Agriculture. The contract required Clark to 

take delivery of hogs weighing fifty pounds and raise them until they attained the

market weight of approximately 275 pounds. The hogs were owned by Schulz 

but were under the care and control of Clark. 

Clark contacted his independent insurance agent, Melanie Umble, 

regarding the custom feeding operation. Umble had previously provided Clark 

with homeowners, renters, health, and life insurance, as well as some farm 

liability insurance for buildings he owned in other locations. Umble, as an 

independent agent, does not work for IMT. Clark told Umble he owned neither 

the hogs nor the building but was responsible for utilities, his own insurance, 

labor, repairs, feed, and medicine. Based on this information, Umble

recommended Clark purchase an IMT Insurance Farmers Personal Liability 

Coverage policy (Policy). Clark also purchased a Custom Feeding Endorsement
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(Endorsement) for an annual premium of $118. The relevant portions of the 

insurance policy are set forth below:

Definitions

A. In this policy, “you” and “your” refer to the “named 

insured” shown in the Declarations and the spouse if a resident of 

the same household. “We”, “us” and “our” refer to the Company 

providing this insurance.

B. In addition, certain words and phrases are defined as 

follows:

. . . .

5. “Custom feeding” means the raising or care of “livestock”

or “poultry”, performed by an “insured” for others for a charge under 

a written or oral contract or agreement.

. . . . 

19. “Property damage” means the physical injury to or 

destruction of tangible property. “Property damage” does not 

include the loss of use, unless the property has been physically 

damaged or destroyed.

. . . .

26. “Your work” means: 

a. Work or operations performed by you or on your behalf; or

b. Materials, parts or equipment furnished in connection with 

such work or operations.

A. Coverage L- Liability

If a claim is made or a suit is brought against an “insured” for 

damages because of “bodily injury” or “property damage” caused 

by an “occurrence” to which the insurance applies, we will:

1. Pay up to our limit of liability for the damages for which an

“insured” is legally liable. Damages include prejudgment interest 

awarded against an “insured”; and

2. Provide a defense at our expense by counsel of our 

choice, even if the suit is groundless, false or fraudulent. We may 

investigate and settle any claim or suit that we decide is 

appropriate. Our duty to settle or defend ends when our limit of 

liability for the “occurrence” has been exhausted by payment of a 

judgment or settlement.

Exclusions (applying to coverage L and M)

Coverages L and M do not apply to the following:

20. Custom Feeding

“Bodily injury” or “property damage” arising out of the 

“insured’s” performance of, or failure to perform, “custom feeding”

operation. But this exclusion will apply only when your receipts 

from “custom feeding” operations exceed $2,000 for the 12 months 

before the beginning of the policy period;
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23. Damage to Your Work

“Property damage” to: 

a. “Your work”, arising out of it or any part of it; or

b. That particular part of any property that must be restored, 

repaired, or replaced because “your work” was incorrectly 

performed on it.

Exclusions (applying to coverage L only)

4. “Property damage” to property rented to, occupied or used 

by or in the care of an “insured”, except for the “property damage”

to the “insured locations” that is caused by fire, smoke or explosion.

The Endorsement stated “Coverage L – Liability and Coverage M –

Medical Payments to Others is extended to apply to ‘custom feeding’ operations 

performed by you. The exclusions under Coverage L and Coverage M pertaining 

to ‘custom feeding’ are deleted. All other provisions of the policy apply.”

On November 4, 2012, a breaker tripped at the building where 837 hogs 

were kept, resulting in their deaths. Clark contacted Umble to report the loss and 

the claim was submitted on February 15, 2013, to IMT. The claim was denied 

and on April 15, 2014, Clark assigned his claim to Schulz, who proceeded to file 

suit against IMT in April 2014. The parties filed cross-motions for summary 

judgment that were heard on August 18, 2015. The district court granted 

summary judgment to IMT on October 20, 2015. Schulz now appeals. 

II. Standard of Review

We review a district court’s grant of summary judgement for correction of 

errors at law. Iowa R. Civ. P. 6.907. Summary judgment is properly granted 

when the moving party demonstrates there is no genuine issue of material fact 

and is entitled to judgment as a matter of law. W. Bend Mut. Ins. Co. v. Iowa Iron 

Works, Inc., 503 N.W.2d 596, 598 (Iowa 1993). We also review the record in the 
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light most favorable to the nonmoving party. Minor v. State, 819 N.W.2d 383, 

393 (Iowa 2012).

III. Extent of Coverage 

Schulz claims that under the language of the policy and endorsement, the

loss of the hogs in Clark’s care is covered by IMT. Schulz relies on the language 

of the endorsement stating “[t]he exclusions under Coverage L and Coverage M 

pertaining to ‘custom feeding’ are deleted” focusing especially on the words 

“exclusions” and “pertaining to.” Schulz claims this language removes not only 

exclusion twenty, entitled custom feeding, but also the sections excluding 

coverage of property “in the care of” the insured, as well as property damage for 

property damage arising out of Clark’s work. 

Our supreme court has held a similar policy and endorsement did not 

function to cover the death of the hogs because the endorsement only removed 

the language in explicitly referencing the custom feeding. See Boelman v. 

Grinnell Mut. Reinsurance Co., 826 N.W.2d 494, 505 (Iowa 2013). Schulz claims 

the policy and exemption in Boelman are significantly different, and that Boelman

should not apply here. In Boelman, the custom feeding endorsement states,

“The endorsement operates to modify the general exclusion under section 6(a) 

regarding custom farming.” Id. at 499 (emphasis omitted). The endorsement in 

the policy at issue states, “The exclusions under Coverage L and Coverage M 

pertaining to ‘custom feeding’ are deleted.” (Emphasis added.)

We are unconvinced by Schulz’s argument and find Boelman does control 

the disposition of this case. The plural form, exclusions, is used because the 
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exclusion for custom farming is removed under both L and M, not because there 

is more than one exclusion which is deleted. Additionally, construing “pertaining 

to” so far as to remove all exclusions touching the custom feeding operation 

would force us to “[engage] in a strained analysis and would be stretching the 

endorsement’s terms beyond the bounds of reasonability.” See id. at 504. 

Applying the Boelman analysis, we find the endorsement functions only to 

remove the discrete custom feeding exclusion found in exclusion twenty. 

Removing this exclusion insures Clark against damages caused by the hogs, but 

not damage done to the hogs. All other exclusions still apply and those 

exclusions eliminate coverage here, as the loss arose out of Clark’s work to 

property in his care or control, both of which are not covered under the language 

of the policy. 

Additionally, the court in Boelman noted, “The fact Grinnell Mutual only 

charged $27 in annual premiums for the added protection under the 

endorsement does not correlate with the substantially elevated risk they would 

have assumed if they had removed all exclusions touching upon the Boelmans’

custom farming operation.” Id. at 505. In the present case, Clark was charged 

an additional $118 in premiums for the endorsement. While somewhat more 

expensive than the policy in Boelman, we find this additional premium does not

correspond with the additional risk of insuring the health of the hogs, but does 

correspond with the additional risk of damage caused by the hogs.
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IV. Doctrine of Reasonable Expectations

Schulz also argues the doctrine of the insured’s reasonable expectations 

should be invoked in this case. “The reasonable expectations doctrine is a 

recognition that insurance policies are sold on the basis of the coverage they 

promise. When later exclusions work to eat up all, or even substantially all, of a 

vital coverage, they cannot rest on technical wording, obscure to the average 

insurance purchaser.” Clark-Peterson Co. v. Indep. Ins. Assoc., Ltd., 492 

N.W.2d 675, 679 (Iowa 1992). “The doctrine is carefully circumscribed; it can 

only be invoked where an exclusion ‘(1) is bizarre or oppressive, (2) eviscerates 

terms explicitly agreed to, or (3) eliminates the dominant purpose of the 

transaction.’” Id. at 677. In order to trigger application of the doctrine of 

reasonable expectations, the insured must prove “circumstances attributable to 

the insurer that fostered coverage expectations, or the policy is such that an 

ordinary layperson would misunderstand its coverage.” Benavides v. J.C. 

Penney Life Ins. Co., 539 N.W.2d 352, 357 (Iowa 1995). 

Schulz claims an ordinary person in Clark’s situation would have expected 

coverage for the hogs based on the wording of the endorsement. However, 

Schulz did not provide evidence that Clark understood the policy’s dominate 

purpose to be for insuring the hogs as property. Instead the evidence presented 

showed all parties understood the limitations of the policy. At her deposition, 

Clark’s insurance agent, Umble, stated she discussed the policy and its purpose 

with Clark before he purchased it, and Clark understood and agreed the policy 

would only cover claims from the custom feeding operation, such as the hogs 
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causing property damage or biting a visitor to the operation. Umble also stated

Clark understood there was no coverage at the time of loss. Clark owns other 

properties on which he operates similar custom feeding operations and has 

purchased insurance. We agree with the district court that “given Clark’s 

experience in custom feeding operations and previous relationships with 

insurance companies . . . it [is] unlikely that Clark reasonably believed the hogs 

were covered.” Therefore, we hold the doctrine of reasonable expectations is not 

applicable here. 

AFFIRMED.